Farmers in England will be able to collect a delinked support payment between 2024 and 2027, which they will be eligible for even if they choose to stop farming altogether.
The Rural Payments Agency (RPA) has recently released more details about how it intends to replace the Basic Payment Scheme with delinked payments from 2024.
After 2027, the delinked payments will be completely phased out.
While the legislation which will be needed has yet to enter Parliament, the following is the latest guidance available on what delinking will mean in practice for farmers.
1. The usual BPS claim method and previously announced progressive cuts to payments will continue to apply for the 2022 and 2023 scheme years. However, from 2024 eligibility for payments will no longer require the occupation of farmland, farming activity, or the possession of entitlements. This means a farmer may get delinked payments even if they choose to stop farming altogether. This suggests that 2023 will be the last time farmers will need to submit a traditional BPS application, and that the entitlements they hold will lose their value and purpose after the 2023 BPS claim period.
2. To simplify the payment process, on the grounds that claimants will be eligible for increasingly small sums after 2024, the RPA has decided that the delinked BPS payments will be based on a reference amount.
- The reference amount will be the average value of the 2020, 2021, and 2022 BPS claims before any penalties and progressive reductions are made.
- Progressive reductions will continue to be applied to the reference amount from 2024 onwards, but the RPA has not released information on the rate of reductions after 2024.
3. To be eligible to receive the delinked payments, farmers must have successfully claimed BPS payments in 2023.
4. Anyone who has claimed under the Lump Sum Exit Scheme will not be eligible to receive delinked payments.
5. It is notable that the reference period for the Lump Sum Exit Scheme (2019 – 2021) and delinked payments is different (2020 – 2022). BPS claimants may still influence the delinked reference amount in this year’s BPS claim, and this will no doubt influence decisions about the timing of land transfers between now and the BPS 2022 claim deadline of 16 May.
6. Farms will need to look carefully at the implications of this policy if they have had business changes which have created new SBI numbers since 2020. If a business has a new SBI, it will normally be treated as a new business which cannot benefit from the BPS claim history of a previous business. There will be exceptions for business mergers, business splits and inheritance cases
7. Delinked payments will be treated as income for tax purposes, as opposed to capital under the Lump Sum Exit Scheme.
8. Although the delinked BPS payments will not be tied into cross compliance, most of the environment, plant health, and animal welfare standards within the current cross compliance regime will continue to apply as they are already legal requirements. Defra has said it will make sure farmers are aware of these legislative requirements as 2024 approaches and will be working to reform the way it regulates them.
Contact a member of Strutt & Parker’s Farming Department to request a free BPS payment calculation which helps to show the impact of BPS reductions on your farming business.